The 6am London Cut | FT Alphaville

The 6am London Cut

Markets: A dovish outlook from the US Federal Reserve and a solid Australian jobs report overshadowed weak trade and business spending numbers from China and Japan. (FT’s Global Markets Overview)

China’s imports and exports both contracted in March, with trade data falling well short of forecasts and rattling nerves over the state of the world’s second-biggest economy. Exports decreased 6.6 per cent in March from a year earlier, missing forecasts for a 4.9 per cent rise. It was the second consecutive weak month following February’s 18 per cent year-on-year contraction. Imports fell 11.3 per cent year-on-year in March, also much weaker than forecast and hoisting a red flag over the strength of Chinese demand. (Financial Times) But from Nomura: “Taking into account the issue of misinvoicing in export data, we believe actual export growth may have improved to 5-8% y-o-y in March from around 3% in January-February.”

“Chinese Premier Li Keqiang ruled out major stimulus to fight short-term dips in growth in the world’s second-biggest economy, dashing investor hopes that the government would aggressively combat a slowdown in activity. Li stressed on Thursday that job creation was the main policy priority… “We will not take, in response to momentary fluctuations in economic growth, short-term and forceful stimulus measures,” Li said.” (Reuters)

A bitter turf war between China’s two most important financial regulators is hampering policy co-ordination just as the country’s debt-laden financial system is starting to show signs of real strain. The China Banking Regulatory Commission and the People’s Bank of China, the central bank, have always been rivals, but now rising tensions are obstructing reforms and efforts to tackle risks in the financial sector, according to officials from both agencies. (Financial Times)

Russia threatened to force Ukraine’s cash-strapped government to pay in advance for its gas imports, adding fresh pressure to Kiev as it struggled to defuse a stand-off with armed pro-Russian separatists in the country’s east. The prepayment idea was raised by Dmitry Medvedev, Russia’s prime minister, at a meeting of senior officials convened on Wednesday by President Vladimir Putin to discuss a feud over Ukraine’s unpaid gas bills after the country missed a $2.2bn payment on Monday night. (Financial Times)

Fed officials held an unusual video conference last month to debate scrapping the 6.5 per cent unemployment rate threshold for the first interest rate rises, paving the way for the big shift in forward guidance that took place later in March. Minutes of the Fed’s last monetary policy meeting detailed an intense discussion about forward guidance and showed some officials “expressing concern” that their projections on interest rates may be “misconstrued” as signalling a more hawkish stance, or a “less accommodative reaction function”, than was the case a few months ago.(Financial Times)

Inflation in Brazil surged in March to the highest level for that month in 11 years, leaving the central bank in a quandary and endangering President Dilma Rousseff’s chances of re-election. (Financial Times)

Japan: Order of new machinery by businesses, which economists say predicts wider capital spending, fell 8.8 per cent in February compared to January. This was worse than analysts’ projections of a 2.6 per cent decline. The data still showed a year-on-year increase, however, rising 10.8 per cent. That was also below forecasts. (FastFT)

BofA on Wednesday became the latest big US bank to be fined for tricking customers into buying add-on credit card protection products. It agreed to a $772m settlement with US regulators, the largest of five similar credit card deals to be hammered out by the Consumer Financial Protection Bureau. (Financial Times)

The civil war within the UK’s Co-operative Group has claimed another victim as Lord Myners, the senior independent director, tendered his resignation amid growing opposition to his plans to reform the UK’s biggest mutual. The chain of supermarkets, funeral homes and pharmacies has now lost its chief executive and senior director within weeks of each other. (Financial Times)

“A top Deutsche Bank saleswoman was placed on leave last month after the German bank found what it regarded as inappropriate communication between her and Singapore’s central bank, according to a person familiar with the matter, marking a significant new twist in the yearlong global investigation into the currency market.” (WSJ)

Ally Financial raised $2.38bn from its IPO, enabling the US government to recoup the amount it spent on rescuing the motor lender during the financial crisis. The listing ranks as the largest US IPO so far this year and comes amid a resurgence of interest in speciality finance companies. (Financial Times)

WH Group’s Hong Kong IPO could raise up to $6.2bn: Even at the low end the company will raise at least $3.8bn, making it the largest IPO in Hong Kong since AIA’s $20bn listing in 2010, and the world’s largest food and beverage IPO since Kraft’s $8.7bn debut in 2001. If investor demand is sufficient, the deal managers may also choose to exercise the “greenshoe” option of offering additional shares, which could take the total capital raised to as much as $6.2bn. (Financial Times)

“BlackBerry Ltd would consider exiting its handset business if it remains unprofitable, its chief executive said on Wednesday, as the company looks to expand its corporate reach with investments, acquisitions and partnerships. “If I cannot make money on handsets, I will not be in the handset business,” John Chen said in an interview, adding that the time frame for such a decision was short. He would not be more specific.” (Reuters)

“Hewlett-Packard agreed to pay $108 million to resolve bribery investigations spanning three countries, in a case involving bags of cash, jewelry and tours of the Grand Canyon… To help secure a multimillion-dollar contract with a government agency in Russia, executives from an H-P subsidiary created a slush fund for bribes and an intricate web of shell companies, for example. In Mexico, H-P executives directed payments to consulting firms with ties to government officials.” (WSJ)

UBS has transferred control of one the world’s top indices for commodity prices to Bloomberg as banks retreat from setting financial benchmarks in the wake of the Libor scandal. (Financial Times)

COMMENT ETC

Dimon, channeling Dickens, MLK and Pinker, warns regulation will push credit costs higher (Financial Times)

Rising inequality is a blemish on Asia’s growth story (Financial Times, Pilling)

The princeling of private equity (Reuters)

New China central bank chief economist, ex-Deutsche Ma Jun, pushes liberalization plan (WSJ)

The internet permits the unbundling of news and information into smaller slices but financially it rewards scale (Financial Times, Gapper)

Clinton and Bush, centrist figures whose parties veer left and right (Financial Times)

The fight for Fannie and Freddie’s profits (Financial Times)

Rolling the dice on Puerto Rico debt (WSJ)

Houston and the rest of the U.S. Gulf Coast have more crude oil than the region can handle (Bloomberg)

OVERNIGHT MARKETS

Asian markets
Nikkei 225 down -10.36 (-0.07%) at 14,289
Topix down -0.38 (-0.03%) at 1,150
Hang Seng up +31.08 (+0.14%) at 22,874
ASX 200 up +24.42 (+0.45%) at 5,488

US markets
S&P 500 up +20.22 (+1.09%) at 1,872
DJIA up +181.04 (+1.11%) at 16,437
Nasdaq unchanged 0.00 (0.00%) at 4,184

European markets
Eurofirst 300 up +4.84 (+0.36%) at 1,338
FTSE100 up +44.92 (+0.68%) at 6,636
CAC 40 up +17.85 (+0.40%) at 4,443
Dax up +15.56 (+0.16%) at 9,506

Currencies
€/$ 1.38 (1.39)
$/¥ 101.79 (101.97)
£/$ 1.68 (1.68)
€/£ 0.8243 (0.8249)

Commodities ($)
Brent Crude (ICE) down -0.46 at 107.52
Light Crude (Nymex) down -0.34 at 103.26
100 Oz Gold (Comex) up +9.40 at 1,315
Copper (Comex) at 3.07

10-year government bond yields (%)
US 2.70%
UK 2.70%
Germany 1.58%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.07bps at 36.64bp
Markit iTraxx Europe -0.52bps at 70.74bp
Markit iTraxx Xover -4.01bps at 277.99bp
Markit CDX IG -2.27bps at 65.43bp

Sources: FT, Bloomberg, Markit